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Markets Pulse

Who are PICC’s Cornerstone Investors?

By Isabella Steger

Cornerstone investors are key to getting any initial public offering off the ground in Asia, particularly in these volatile markets.

Luckily for People’s Insurance Co. (Group) of China Ltd., its up to $3.6 billion IPO has managed to secure an impressive list of cornerstone investors, not least a commitment of $500 million from American International Group Inc.

Cornerstone investors are a staple of Hong Kong IPOs in particular. Investors get guaranteed access to a company’s IPO, but must agree in return to a lock-up period in which they cannot sell their shares. Having stellar names as cornerstone investors can help boost sentiment when markets are down.

Cornerstones can either be institutional investors or well-known tycoons, although as Deal Journal has previously reported, the mix has steadily shifted away from high-net-worth investors this year to strategically similar companies, or institutions with government or political ties.